California cannabis startup Canndescent quietly laid off 16 people just days before closing a massive funding round
- California cannabis company Canndescent laid off 16 employees on September 5, according to a memo obtained by Business Insider.
- "We are now well into the year and believe it's important to make immediate changes to our operating plan in order to drive growth and control costs," Chief People Officer Kerry Arnold wrote in the memo. You can read the full memo below.
- The company closed a $27.5 million funding round five days later that valued the company at over $200 million, Business Insider reported at the time.
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Layoffs are sweeping the cannabis industry.
California cannabis company Canndescent quietly laid off 16 employees and froze hiring for six open positions just prior to closing a funding round in September, according to a memo obtained by Business Insider.
The memo, written by Canndescent Chief People Officer Kerry Arnold was sent out on the evening of September 5.
"We are now well into the year and believe it's important to make immediate changes to our operating plan in order to drive growth and control costs," Arnold wrote. "In recent weeks, the executive team has been tasked with evaluating every area of the business to establish clear priorities and a more efficient organizational structure."
"Unfortunately, we had to make a difficult staffing decision, eliminating 16 salaried positions and electing not to fill 6 open roles," the memo reads.
Five days after the memo went out, Canndescent closed a $27.5 million Series C funding round which gave the startup a valuation of between $200 and $300 million, Business Insider reported at the time.
Canndescent bills itself as a cannabis CPG, or consumer packaged goods company. It has two marijuana brands it sells in California: Canndescent and the cheaper Goodbrands. The company is led by CEO Adrian Sedlin.
"Sadly we too have been impacted by the drying up of capital markets," Sedlin said in an emailed statement to Business Insider. "As a result we've had to make difficult decisions with regards to valued personnel. These decisions are never easy. We remain hopeful California regulators will act swiftly and partner with our industry to preserve as many jobs as possible through sensible public policy."
A dearth of capital coupled with lower-than-expected retail sales in California and other states where cannabis is legal has forced numerous startups in the industry to lay off employees, seek new sources of funding, and pare back investor expectations.
Leafly, a popular cannabis website, instituted a hiring freeze in October and is taking steps to reign in its spending including cutting all non-essential travel for employees, according to a memo obtained by Business Insider. And Pax, a vape startup, laid off 25% of its employees in October, delayed a planned IPO, and ousted its CEO in September.
Well over 900 people have been laid off from both US and Canadian cannabis companies in recent weeks.
Read the full memo here:
"We are now well into the year and believe it's important to make immediate changes to our operating plan in order to drive growth and control costs. In recent weeks, the executive team has been tasked with evaluating every area of the business to establish clear priorities and a more efficient organizational structure. Unfortunately, we had to make a difficult staffing decision, eliminating 16 salaried positions and electing not to fill 6 open roles.
We are extremely grateful for the contributions made by each individual affected by this workforce reduction. They will be missed by their colleagues and friends at Canndescent, and to support the employees impacted by this change, we are providing transition support including separation pay, extended benefits, and assistance from our recruiting agency partners.
Change is sometimes difficult, but the adjustment we are making put us in the best position to succeed into the future. Canndescent is a great company, with talented and hard-working teams, strong brands and an extremely bright future. The workforce reductions we've made are as regrettable as they were essential and represent all the changes we intend to make at this time.
Thank you all for your dedication and commitment to our long-term success!"
Kerry Arnold
Chief People Officer